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Buying Property in Budapest

If you're thinking about buying property in Budapest as a long term investment than here you'll find all the information you'll need on the buying process, legal background, along with other tips on purchasing real estate inthe Hungarian capital.

Since Hungary is member of the EU the process of property buying is similar to that in other modern European countries.

Legal Background to Buying Property in Budapest

You can purchase real estate in Budapest, Hungary either as a private person or you can set up a company (LLC) in Hungary which is recommended if your purpose is long-term property investment and you plan to buy more than one property. Foreign, non-resident private individuals can own only one property in Hungary.

Foreigners - as a private individual and through a company - may buy any property in Hungary except cultivable lands and nature preserve areas.

However, you can buy a plot of land smaller than 6,000 square meters...

Buying Property in Hungary as a Private Person

A government decree issued in 1996 regulates acquisition of property by foreigners as private indivudals. The decree says that any foreigner wanting to buy real estate in Hungary has to obtain a permit unless she/he inherited the property.

Those citizens from the European Union (EU), European Economic Area (EEA), and Switzerland who have been living in Hungary for minimum 4 years can buy residential property in the country without a permit.

Permit requirement for EU citizens will be abandoned in the near future.

In other cases both EU citizens and people from non-EU countries need to get a special permit.

In order to get this permit you must submit an application to the relevant administration office (Közigazgatási Hivatal -in Budapest, or in the county you want to buy real estate).

If you don't speak Hungarian the best is if you hire a lawyer to accomplish the buying process including assisting you to get the permit.

Process of Buying Property in Budapest

As a Private Person

If you've decided on the location of your Budapest property investment hire an English speaking lawyer and pay the initial deposit (usually 10% of the price of a resale property and around 30% on new or "off-plan" real estate) on he property. A preliminary purchase contract will be drafted and signed by the buyer and the seller on the reservation.

Note that always the buyer hires the lawyer and pays his orher fees. Usually the fee of the lawyer is around 1-1.5 % of the price of the property.

For the permit application you'll need to include the buyers certificate of nationality. To get the certificate go to a public notary to get a notarized copy of your passport which your lawyer can use to iniate the permit application.

To get the permit you have to pay a duty of 50,000 HUF (or 10,000 HUF if you hold a permanent residence permit and your citizenship petition is in the process).

Usually the getting the property purchase permit is a routine proceess and it is issued within 4-6 weeks if the purchase doesn't interfere with local government or other public interest.

If the administration office rejects your permission you can appeal the decision in court within 30 days of receipt of resolution.

When the full price of the property is paid your lawyer will prepare the final property purchase contract that the buyer and seller sign.

Your lawyer will submit the final purhcase contract, along with the permit, to the Land Registry (Földhivatal) to have the ownership registered.

Once you receive the resolution on your registry as buyer from the Land Registry - may take 3-6 months -you officially own the property.

Buying Property in Budapest as a Business Entity

A company set up and registered in Hungary doesn't need permit to buy real estate.

Setting up acompany for the purpose of property investment has the advantage that you can write off on the company account almost all administrative expenses related to the property purchase.

Click to read our page about setting up a company in Hungary.

Cost of Buying Property in Budapest, Hungary

Additional cost of purchasing real estate in Hungary expect to be around 5-10% of the total purchase price of the property including lawyr fee, notary fee, and other administrative expenses.

Price of real estate in Budapest (2008): cc. 310, 000 HUF/square meter for a flat in Pest, and cc. 420,000/square meter in Buda.

Rates of Stamp Duty When Buying Property in Hungary:

In case buying a used property in Budapest or in any other part of Hungary you have to pay:

Up to 4,000 000 HUF of the property price you'll pay 2 % stamp duty, and 6% on the remaining amount above 4 M HUF.

Type of property	Price of property	For individual buyers	For companies
Used properties	less than 4 M HUF	2 %	2 %
New apartments	less than 15 M HUF	exempt	exempt
	between 15-30 M HUF	6 %	2 % on the total price
	above 30 M HUF	6 % on the total price	2 % on the total price
Commercial and plots	-	10 % on the total price	10 % on the total price

Do You Have to be Present in Person when Buying Property in Budapest?

Usually the buyer and the seller of the property must sign the contracts and related documents personally. But if you cannot travel to Hungary the signing process can take place in your home country using DHL to send the documents fast.

Another solution is to assign a Power of Attorney in the presence of your lawyer while you're in Hungary. A document on assigning a Power of attorney to proceed on your behalf has to be written in Hungarian and signed in front of a notary.